It is a real privilege to welcome among us the 2001 Nobel Prize winner in economics Professor Joseph Stiglitz. The Economic Commission for Europe and everyone here today feels proud that you have accepted our invitation to deliver the lecture in honour of the first Executive Secretary of the United Nations Economic Commission for Europe, Swedish Nobel Prize winner, Gunnar Myrdal.

Before introducing our honoured guest today, I would like to recall that this is the second of the renewed Myrdal Lectures and that the first one was delivered in 2003 by Nobel laureate, Professor Douglass C. North, on the Role of Institutions in Economic Development. This lecture is now available in published form as Occasional Paper No. 1 of UNECE.

As you may remember, under the leadership of Gunnar Myrdal who served as the first Executive Secretary of the UNECE from 1947 to 1957 during the very difficult years of the cold war, UNECE developed a bridge between the Western and Eastern half of Europe when no one else except UNECE was willing or able to do so and when the prospects of uniting them seemed so distant as to be merely academic. Myrdal was a major influence in keeping alive the idea of a larger Europe that transcended the boundaries of Western Europe and the original European Community. Unfortunately, he died in 1987 just before his vision was realized.

If Gunnar Myrdal were here today, I think he would be delighted by Professor Stiglitz's willingness to deliver today's lecture on The Process of European Integration and the Future of Europe, and to deliver it in a very historic moment, on the eve of the unification of Western and Eastern Europe. We are all honoured to have Professor Stiglitz with us. Not only is Professor Stiglitz a fellow Nobel Prize winner, but he is also one of the most prominent and original economic thinkers in the world today. He is one of the originators of a new field of economics, the economics of information, and has made major contributions to other areas in economics. In addition, he is recognized around the world as a leading economics educator. His academic career has taken him to Oxford, MIT, Yale, Princeton, Stanford and Columbia, where he is currently teaching.

He served as Chairman of President Clinton's Council of Economic Advisors and later as Senior Vice-President and the Chief Economist at the World Bank. He was deeply involved in many of the policy decisions of the decade and was uniquely positioned to watch the nineties unfold. Though a consummate political insider, Professor Stiglitz grew increasingly disillusioned with the failures of the international economic policies and the international financial institutions that enforce them and began to voice his thinking in public speeches and writings.

In his internationally best-selling book Globalization and Its Discontents, Professor Stiglitz examines the strengths and weaknesses of the main institutions governing globalization. In chapter 7, which is much relevant for today's lecture, he argues that there are "better roads to the market" than text-book models advocated by the IMF. He stresses the importance of the institutional infrastructure for a market economy, the need for competition, promoting growth and prosperity necessary for long-run stability, policy-mix conducive to job creation, investments to social capital, etc. While the IMF's orthodoxy is efficient in achieving short-term macroeconomic stabilization it does not ensure long-term stability, economic growth and positive social development. In The Roaring Nineties, he sees parallels between what went wrong with globalization abroad and what went wrong with America in the nineties. Professor Stiglitz has seen policy making both from the inside as well as the outside. So, I think it will be very revealing to hear him discuss the process of European integration and the future of Europe.

As I already noted, we are on the eve of a historic enlargement of the EU15 by 10 member states to a EU25. This enlargement is significant on many levels. It poses a unique challenge in that it is the largest in terms of scope and diversity. The 10 new members will contribute an additional 24 percent in geographic area, 75 million people, and a wealth of culture and history. That the majority of the candidates are former Eastern bloc nations is momentous in terms of a changing Europe. This addition of members is also the culmination of more than a decade of economic and political change in both the European Union and the acceding countries. Allow me to add that my homeland, Slovakia, is among the acceding countries and that I am proud of it.

Enlargement also brings about new challenges. It will significantly increase the economic disparities in the Union, with associated tensions for social cohesion. The enlarged EU will face the challenge to withstand the intensified competition in the global economy, which is a pre-condition for achieving high and sustained rates of economic growth and employment. This will not be possible without structural reforms in labour, capital and product markets. It will also require increasing the flexibility of the macroeconomic policy making in the European Union.

Professor Stiglitz has been working hard to change the policies and attitudes of governments and international organizations for a fairer distribution of the benefits of globalization. The UNECE, on the other hand, is intent on providing a much-needed forum for alternative policy prescriptions. In this spirit, I have great pleasure in introducing Professor Joseph Stiglitz as the speaker for the Second Gunnar Myrdal lecture.